The eight-member board of directors of the Omaha Public Power District (OPPD) – the 12th -largest public power utility nationwide, serving a population of nearly 800,000 – approved a modified proposal on December 17 to restructure the way electric rates are calculated.
Through 2019, the four-phase plan will raise the service charge for homeowners and small businesses by about $20 and will decrease the usage charge by slightly more than 20 percent.
Right now, Omaha.com reported, about 70 percent of the utility’s costs are for fixed expenses such as infrastructure, equipment and workers — costs that don’t change when people use less energy. However, 90 percent of an average resident’s bill is determined by usage. That means that, as customers continue to use less energy because of increased efficiency — one of the market forces in the industry today — OPPD’s revenues have fallen much more than its costs. The restructuring would reduce those effects for OPPD; and, the utility claims, would be “revenue-neutral” for its customers.
What’s more, OPPD is emphasizing that, over the term of the plan, the utility will get less than it originally requested. Specifically, the terms of the new plan include:
- June 1, 2016, the service charge for residential customers will go from $10.25 to $15 (down from the $18 charge originally proposed). The usage charge will decrease by 5 percent (down from 9 percent).
- January 1, 2017, the service charge will increase to $20 (down from the $25 charge originally proposed). The usage charge will decrease by 11 percent (down from 16 percent).
- January 1, 2018, the service charge will increase to $25 (down from the $30 charge originally proposed). The usage charge will decrease by 16 percent (down from 22 percent).
- January 1, 2019, the service charge will increase to $30 (down from the $35 charge originally proposed). The usage charge will decrease by 22 percent (down from 28 percent).
However, BOLD Nebraska, a group that advocates on behalf of ratepayers, has asked for signatures on a petition that says, “I oppose OPPD’s unfair 341 percent ‘fixed’ rate hike.”
The group argues that “OPPD says that ‘average’ users’ bills won’t change much, but it’s unfair and discriminatory to lower electric bills for high energy users, while raising bills for low-income customers (typically low-energy users), those who work hard to conserve energy (often fixed-income seniors), and customers who have made investments to be more energy efficient in their homes. Customers who use less energy should pay less, and customers who use more energy should pay for the increased costs of generation and distribution of energy to everyone.”
In addition, several other community groups have voiced their opposition to the plan.
Indeed, under these changes, average energy users – whose monthly bills average between $80 and $125 – would see little or no change in their monthly charges, according to OPPD.
What’s more, high energy users, whose monthly costs average more than $125, would see a decrease in their current bills.
However, those in the lower energy usage category, whose bills average less than $80 a month, would see an increase.
To protect its low-income customers from being hard-hit by the new plan, OPPD has announced a Residential Low Usage/Low Income Customer Program to assist qualifying customers with the transition to the new rate structure, beginning June 1.
In addition, the board approved a general rate increase of 4 percent across all customer classes, scheduled to go into effect on January 1. “The rate increase is needed as a result of decreased revenue due to lower market prices for off-system sales, less energy usage and very little growth in OPPD’s customer base,” OPPD commented.
“It will strike a better balance between fixed and variable costs,” the utility said, noting, “The new structure will more accurately reflect the cost of delivering energy to all of OPPD’s customer-owners. On average, 70 percent of customer bills will still be variable, so customers will continue to realize considerable savings by lowering their energy usage.”